Overview
The Department of Education will resume interest on loans for borrowers in the SAVE plan starting August 1. Borrowers have several options based on their specific forgiveness path and financial situation, but immediate action is not required for all.
Key Changes to SAVE and Forbearance
- Interest resumes for nearly 8 million SAVE borrowers on August 1, ending interest-free forbearance.
- Monthly payments remain on hold in general forbearance until at least mid-2026, barring court decisions.
- The Department encourages transitioning to a legally compliant repayment plan but does not require it before August.
Options for PSLF Borrowers
- PSLF borrowers can stay in forbearance and later use the PSLF buy-back process to count paused months.
- Alternatively, PSLF borrowers may switch now to another qualifying repayment plan, restarting payments after processing delays.
Guidance for IDR Forgiveness Seekers
- IDR forgiveness seekers should consider switching to another income-driven repayment plan promptly, as forbearance months will not count toward forgiveness.
- No buy-back process exists for IDR, so waiting extends the forgiveness timeline.
Guidance for Non-Forgiveness Borrowers
- Those not eligible for forgiveness can stay in forbearance or move to a new plan, but should prepare for payments or accruing interest soon.
- Making lump-sum payments before August may help reduce principal while interest is frozen.
Eligibility and Transition Issues
- Most SAVE borrowers should qualify for another IDR plan, but system update delays may impact enrollment.
- Seek the most affordable interim plan if not yet eligible for the intended plan.
Payment Amounts and Timing
- Monthly payments will likely increase when moving from SAVE to another plan, as SAVE offered the lowest payments.
- First bill on a new plan may be delayed due to form processing backlogs.
Help for Those Unable to Pay
- Borrowers unable to afford new payments can remain in forbearance as long as the status continues, but should stay informed of changes.
- Interest-only payments are allowed and help prevent debt growth.
- Economic hardship or unemployment deferment are other possible options, but interest may still accrue.
- Contact servicers or use the FSA website for hardship assistance.
Action Items
- ASAP – All borrowers: Review financial situation and forgiveness eligibility to decide on repayment plan transition.
- Before Aug. 1 – Interested borrowers: Make a lump-sum payment if aiming to reduce principal before interest accrues.
- TBD – Borrowers switching plans: Apply for a new income-driven repayment plan as soon as ready.
- TBD – All in forbearance: Monitor Department of Education and servicer updates for ongoing policy or court changes.